UK Money Tips Posts

If you are choosing a loan, it can be really tricky to know whether a certain type of loan will work for you. You may wonder who they are for, who they suit the best and whether they will be right for you. There are different reasons why they may be good or bad and so it is a good idea to have a good think about whether they will suit you. Think about what you are looking for in a loan and lender and then you will be in a better position to know whether the loan will suit you.

You might want to therefore ask yourself a selection of questions and these will help you to know whether the loan will be right for you.

How much money do I need? – an instalment lender will tend to lend you between £100 and £1000. This means that if you need more money than this, then they will not be the right choice for you. You also need to be aware that if you are first time borrower then a lender may not let you have a large amount of money to start with. They may want you to borrow a smaller amount and show that you are capable of repaying that before they lend you more. Therefore, if you need more than a few hundred pounds you may need to contact some lenders to see whether they will be happy to lend it to you. If you cannot find a lender willing to give you as much as you need, then an instalment loan will not be a suitable choice.

How much can I afford to repay?– it is well worth looking back at your previous bank statements to find out how much you would normally be able to afford to repay. It might be that you normally have a bit of money left at the end of each month and you will be able to use that to make the repayment. However, this may not be enough or you may find that you do not have any left. This does not mean that you have to give up though. At this point you will need to check and see whether you can get more money in any way. This might seem pretty hard but it need not be. If you have a look at the things that you normally buy, you may find that you will be able to get some of them cheaper or you may even be able to not buy them at all. You may also be able to think of ways that you could generate a bit more money, perhaps doing some more work, taking on an extra job, doing online work or even selling things that you own.

How much am I prepared to pay? – You will need to think about the amount that you are happy to pay for the loan. All loans cost money and you need to decide how much money you will be happy paying for the loan. It may be that you will not think you mind, but if the loan cost a million pounds you would be unlikely to take it out! So, just check how much it costs and think about whether you feel that is a fair amount. You may want to compare that price with other lenders or other types of loan and then you will get a better idea as to whether you feel that it is a good price or not.

Do I like the lender? – for some people the lender is not important, but others might feel that they want the lender to have particular features. It could be that they want a lender that they have heard of, that comes recommended or things like that. There are all sorts of possibilities and it is a good idea to have a quick think about what might be important to you. Even if they are not that important, it could be a good idea to have a think because if find that two lenders are really similar in cost and repayment amount then this could be a way to choose between them.

So, you can see that it takes a bit of time to think through whether the loans will work for you. Whether they will suit you will depend on your specific circumstances. You may find that at one point in time they will be the best possible loan but on another occasion they will not. Therefore, you will need to assess them in light of your current situation and your current lending needs. It is also important to compare the lenders within each loan type as they will vary and some will suit your needs better than others.

There are lots of different types of short-term loans and if you are not familiar with them, then you might find it a bit confusing knowing how they work. It can be a good idea to become familiar with them though. This is because you might need to use the loans at some stage and you will need to know what they are so that you can decide whether they are the right option for you.

You will need to make sure that you are totally aware of how they work and then you will know that you can make the right decision.

Who can qualify?

You will firstly need to know who can qualify for these loans. It is often the case that with a loan, you will need to fulfil all sorts of criteria in order to get one. This can not only make the application process tedious and difficult it can also lead to anxiety as to whether you will be accepted or not. With an instalment loan the rules are very simple. You will need to be over the age of eighteen, a UK resident, have a UK bank account and a regular income.

With many other loans you will also need to have a good credit record. This will help lenders to trust you as they will be able to see whether you will be able to repay the loan and whether you will be capable of making regular payments. They will look at whether you have repaid loans in the past, if you have a regular income and if you are making regular payments now. If you do not fulfil their criteria, then they will not lend to you.

The instalment loan does not have this criteria and so it means that is available to a lot more borrowers. To this that have not borrowed before, those that have had trouble repaying in the past and those that do not make regular payments at the moment.

How much can you borrow?

It is worth knowing that an instalment loan will tend to lend you from between £100 and £1000. This means that if you need a reasonably small amount of money then they will be a good option for you. You will not need to borrow more than you need, unlike with some other loans where you will have to borrow large amounts of money. It might seem good being able to borrow more than you need so that you can treat yourself. However, you might find that this means that when it comes to repaying you will struggle. You may find that you will not be able to afford those repayments and then regret that you borrowed so much money. Some loans are more open ended, such an overdraft or credit card when you can borrow up to a certain amount or choose how much you borrow. This demands a certain amount of self-discipline which it is not always easy to have and you may just end up spending all the money offered without thinking about the consequences.

It is worth noting that even if instalment lenders offer up to £1,000 it will not necessarily mean that all borrowers will get this amount. This is because they will often lend smaller amounts to first time borrowers. They will want to make sure that the borrower can repay a smaller amount before they take a risk in lending them a larger amount of money.

How do you repay?

The title of this loan really answers the question – you repay in instalments! However, how many instalments you pay in and how much you pay for each one will vary between lenders. It may also depend on how much you borrow. It is likely that the repayments will go out of your bank by direct debit on the day that you get paid and therefore you should have enough money available to cover the repayment. You will therefore have no risk of forgetting to make the payment. You will need to be sure though, that there will be enough money available to cover the repayment and that you will be able to manage all of the other payments that you will need to make as well that month.

So, you can see that they do differ form other types of loan. They are similar to a payday loan in that you borrow smaller amounts and that you do not need to have a good credit record in order to qualify. However, they do only provide you with smaller amounts of money compared to some other types of loan. This makes them easier to manage as the repayments will be smaller but you will need to decide whether this will be enough money for you. Of course, this will depend on how much money you need.